THE Independent Regulatory Board for Auditors (IRBA) wants individual members and auditing firms found guilty of committing severe transgression to face fines between R10 million and R25 million for each charge.
The range of fines meted out to auditing firms will depend on whether the transgression is priority or high priority.
For severe transgressions, the fines will be set between R5m and R25m, moderate transgressions between R3m and R15m, and between R1.5m and R7.5m for minor transgressions.
Priority matters will attract fines between R300 000 and R12.5m, depending on the severity of the transgression.
According to the IRBA, individuals could be fined between R100 000 and R10m, also depending on severity.
The board explained that the primary purpose of sanctions is to hold registered auditors and candidate auditors accountable for any improper conduct committed during their registration.
The IRBA believes that appropriate sanctioning enforces compliance with the legislative framework, promotes public trust in the profession and in the regulation of the profession, and deters other registered auditors and registered candidate auditors from committing similar improper conduct.
It defines a transgression as an act or omission by a registered auditors and registered candidate auditors which results in improper conduct.
Finance Minister Enoch Godongwana sets the monetary fines and the maximum fine limits.
”The considerations listed are not exhaustive and not all considerations will be applicable to each matter. The enforcement/disciplinary committee reserves the sole discretion to decide the relative weight to ascribe to the considerations on a matter-by-matter basis,” the IRBA states in its draft guidelines.
When determining whether or not a matter is of high priority, the IRBA will consider if the entity is a public interest entity, and whether it has elevated risks.
It will also determine if the transgression has a material financial impact on third parties and whether it causes harm to public confidence in the profession.
Auditors were severely criticised by retired chief justice Raymond Zondo in his final State Capture Commission of Inquiry for their role in covering up widespread fraud and corruption.
In his final report, Zondo recommended that the Auditor General South Africa should be further capacitated so that it can audit all public entities.
”To the extent that that is not practicable, serious consideration should be given to private firms being appointed to audit state-owned entities (SOEs) only if they can demonstrate that they have the requisite skills and also the requisite understanding of their obligations to the public at large when they audit an SOE,” the final report further stated.